Week Three: FA Regulatory Updates

The Honourable Michael Kirby AC CMG, a retired judge of the High Court of Australia, delivered a speech in 2011 titled ‘Forensic Accounting – new rules and opportunities’ to a conference convened by chartered accountants. He made the following remarks:

“Some developments are happening that amount to positive phenomena, likely to strengthen the profession of forensic accounting. One of these is the new regulatory environment. Thus, a revised professional standard on forensic accounting services has tightened the requirements of those who may practise in the field, although doubts have been expressed that some members of the profession do not understand how they may be affected by such changes…”

The Honourable Kirby AC CMG considers that changing the regulatory environment will strengthen the profession of forensic accounting. The challenge for forensic accountants, practising in the profession, is to keep up with the changes. At paragraph 1.2 of APES215 (page 3) reference is made to “APES 215 [setting] the standard for Members in the provision of quality and ethical Forensic Accounting Services”. Why is it important that forensic accountants understand and keep up with the development of this new “regulatory environment”?

I first encountered the world of forensic accounting in high school, and I learnt that it was a relatively new concept. Even in the few years since then, the scope of forensic accounting has broadened as technology and capabilities rapidly advance.

Kirby mentions in his speech that there is a new professional forensic accounting (FA) regulatory environment (Kirby, M., 2011), as set out in APES 215. Paragraph 1.3 of APES 215 specifically states that forensic accountants must “follow the mandatory requirements set out in [the document] when they provide [FA] services” (APES, 2013).

Figure 1 – Accounting Professional & Ethical Standards Board Logo (Source)

It is highly important for FAs to keep up-to-date with and understand the development of this new regulatory environment so that they maintain compliance with those regulations. The updates to the regulatory environment include updates to requirements for compliance, integrity, independence, and objectivity (APES, 2013).

In my opinion, it is important for forensic accountants to understand these changes not only for the aforementioned reasons, but also to strengthen the credibility of the forensic accounting profession. For many years there have been no official regulations as to who can become a forensic accountant (Williams, E., 2016) and how they should act in that role, and this has lead to questionability regarding expert opinions, and often exclusion of evidence as a result (as in: ASIC v Vines 2003). 

Resources

APES. (2013). APES 215 Forensic Accounting Services. Retrieved April 20, 2016, from https://blackboard.qut.edu.au/bbcswebdav/pid-6275766-dt-content-rid-5862856_1/courses/AYB115_16se1/Revised%20APES%20215%20-%20December%202013%281%29.pdf

APESB. (2015). Accounting Professional & Ethical Standards Board. Retrieved April 19, 2016, from http://www.apesb.org.au/

ASIC v Vines [2003] NSWSC 1095

Kirby, M. (2011). Forensic Accounting – New Rules and Opportunities [Speech]. Retrieved April 14, from http://www.michaelkirby.com.au/images/stories/speeches/2000s/2011/2525-FORENSIC-ACCOUNTING-CONF-MARCH-2011.pdf

Williams, E. (2016). What Credentials do you need to be a Forensic Accountant? Chron. Retrieved April 16, 2016, from http://work.chron.com/credentials-need-forensic-accountant-15276.html